Methods of Payment
Standard international methods of payment are used in North Macedonia. For shipments of goods, advance payment is the most commonly used method; credit terms are usually used in long-established relations with known customers. Credit is allocated on market terms and usually ranges from 30 to 90 days. Letters of credit and bills of exchange are used in shipment payments. As with any international transaction, the method of payment is determined by the degree of trust in the buyer’s ability and willingness to pay. Full payment in advance is highly recommended for the first few transactions and deliveries while the importer is still unknown.
The debt collection process is time-consuming, expensive, and complex. There are a number of collection agencies. A creditor may choose to sue the debtor in court; if the court rules in favor of the creditor, the creditor may engage a licensed enforcement agent to collect its due receivables.
For more information about the methods of payment or other trade finance options, please read the Trade Finance Guide available at https://www.trade.gov/trade-finance-guide-quick-reference-us-exporters.
Banking Systems
The financial system in North Macedonia consists of the National Bank of the Republic of North Macedonia (NBRNM), commercial banks, financial companies, savings houses, exchange offices, the Deposit Insurance Fund, insurance companies, pension funds, investment funds, brokerage firms, and a stock exchange. The banking system itself is two-tiered, based on the Banking Law and the National Bank Law. NBRNM is the independent money-issuing institution responsible for price stability, stability of the national currency (denar), stability of the financial system, liquidity of payments within the country and abroad, and the conduct of monetary policy and foreign exchange policy. The Supervision Department at NBRNM serves as the main regulatory body responsible for the supervision of all banking institutions and savings houses.
The main goal of NBRNM’s monetary policy is to maintain price stability. This objective is achieved by an exchange rate targeting strategy, whereby the denar is pegged against the euro as a nominal anchor for the economy. Twice a year, NBRNM prepares monetary and foreign exchange projections and reports, which are publicly available.
The banking system in North Macedonia consists of 13 private banks, one state-owned bank (Development Bank of North Macedonia), and two savings houses. On August 12, 2020 NBRNM revoked the operating license of Eurostandard Bank due to the bank’s insolvency. That bank controlled just 1.3 percent of total banking sector’s assets and its closure did not affect the banking sector’s stability but improved its overall ratio of non-performing loans by one percentage point. According to the Banking Law, banks observe the principles of profit maximization, liquidity, safety, and profitability. A foreign bank can have a presence either as a legal entity or by opening a branch or a representative office. In 2020, foreign capital was present in 13 and was dominant in 10 banks, controlling 71.9 percent of total banking sector assets, 80.9 percent of total loans, and 70.2 percent of total deposits. The operations of non-bank financial institutions are regulated by the provisions of the previous Banking Law and appropriate sub-laws.
The three largest banks, Komercijalna Banka, NBG Stopanska Banka Skopje, and NLB Bank, hold 57.3 percent of total assets, 49.6 percent of total loans, and collect 54.2 percent of total deposits. The nine smallest banks, which have individual market share of less than six percent, account for 23.5 percent of total banking sector assets. The savings houses’ shares in total assets of deposit-taking institutions in 2020 remained 0.4 percent, total loans 0.5 percent, and total household deposits 0.4 percent.
In 2020, the banking sector faced a number of COVID-19-induced challenges but showed adequate response to risks. It remained stable, while also increasing activities and contributing to mitigating the consequences of the crisis. Measures adopted by the NBRNM provided additional liquidity and regulatory flexibility, which allowed banks a temporary loan collection deferral to March 2021. About 45 percent of the total loan portfolio was rescheduled in the second quarter of 2020, and an additional 7 percent from Q3. At the end of 2020, 7.5 percent of total loans were still under deferred payment.
In 2020, total deposits increased by 6.2 percent, three percentage points less than the growth in 2019. Household deposits grew by 4.5 percent, while enterprise deposits increased by 10.9 percent. Total loans to enterprises and households grew by 4.1 percent on an annual basis, mostly due to a 6.9 percent increase in loans to households, while loans to enterprises increased by one percent only. Banks’ liquid assets in 2020 were 32.5 percent of total assets, 0.6 percentage points higher compared to the previous year. The structure of liquid assets remained the same, as banks tend to keep most of their liquidity safe by purchasing treasury bills and bonds, central bank bills, or keeping accounts abroad. The capital adequacy ratio of the banking sector went from 16.3 percent at the end of 2019 to 16.7 percent at the end of 2020, with all banks maintaining a ratio above the required minimum. The overall non-performing loan (NPL) ratio was 3.4 percent, dropping 1.4 percentage points from the previous year due to NBRNM’s measure for differed loan payments. The NPL ratio of the household and corporate sectors further dropped to 1.6 percent and 5.2 percent respectively.
In 2020 NBRNM conducted different stress-tests on banking sector sensitivity to increase credit risk, liquidity shocks, and insolvency shocks, all of which showed that the banking sector is healthy and resilient to such shocks, with its capital adequacy ratio remaining above the legally required minimum of eight percent.
Banking supervision is in full compliance with BASEL 2 recommendations, and it is currently implementing provisions of BASEL 3 standards.
In 2020, total assets of North Macedonia’s banking sector reached $11.05 billion, a 6.5 percentage point increase over 2019. The banking sector’s overall profitability reached $136.8 million, which was 8.5 percent higher compared to 2019. Profitability indicators in 2020 slightly dropped over the previous year. ROE (return on equity) reached 11.3 percent 0.4 percentage points less than in 2019, while ROA (return on assets) remained at 1.3 percent. At the end of 2020, the banking sector employed 5,753 people, 179 less compared to 2019.
Although considerably improved over the past several years, North Macedonia’s financial system is still relatively underdeveloped compared to Western standards. Banking is very conservative, offering traditional banking services only. Credit is available to private companies but is still subject to significant collateral in the form of real estate, which often is appraised by the banks at lower than market value, and presents an impediment for start-ups, micro-, small-, and medium-sized companies in their access to financing. Overall customer service does not meet Western standards. However, the use of credit cards is widespread, and most companies and shops accept credit cards as a payment instrument.
The reference rate (interest rate on 28-day central bank bills) was further cut in 2020 and currently stands at a historic low of 1.2 percent. The weighted average lending rate of the banking system in 2020 dropped to 4.8 percent, while the weighted average deposit rate dropped to 1.1 percent.
For more detailed information about various aspects of the banking system and its performance, NBRNM publishes annual and quarterly reports on banking supervision as well as other data and information on its website. The Department of State’s Investment Climate Statements also has useful additional information.
Foreign Exchange Controls
North Macedonia does not restrict reinvestment or repatriation of profits and investment capital. Foreign investors are entitled to transfer profits and income without a transfer tax. Investment returns are generally remitted within three working days. There are also no legal limitations on private financial transfers, foreign exchange transactions, and capital movements. Local companies can pay for imported goods or services in foreign currencies, as they are allowed to hold a foreign exchange account in one or more banks.
U.S. Banks and Local Correspondent Banks
There are no U.S. banks present in North Macedonia.
Major Banks in North Macedonia
Komercijalna Banka AD
Orce Nikolov 3
P. O. Box 563
1000 Skopje, Republic of North Macedonia
Tel: 389-2-316-8168
Fax: 389-2-322-0975
NBG Stopanska Banka AD Skopje
11 Oktomvri 7
1000 Skopje, Republic of North Macedonia
Tel: 389-2-329-5295
Fax: 389-2-311-4503
NLB Bank
Mother Teresa 1
1000 Skopje, Republic of North Macedonia
Tel: 389-2-15-600
Fax: 389-2-310-5681
Sparkasse Ohridska Banka
Orce Nikolov 54
1000 Skopje, Republic of North Macedonia
Tel: 389-2-316-7600
Fax: 389-2-311-7164
Halkbank
Mito Hadzivasilev Jasmin bb
1000 Skopje, Republic of North Macedonia
Tel: 389-2-324-0800
Fax: 389-2-329-6330
ProCredit Bank
Manapo bb
1000 Skopje, Republic of North Macedonia
Tel: 389-2-324-6000
Fax: 389-2-321-9901
Sparkasse Bank
Makedonija 9 – 11
1000, Skopje, Republic of North Macedonia
Tel: 389-2-320-0501
Fax: 389-2-320-0515
Development Bank of North Macedonia
Dimitrie Cupovski 26
1000 Skopje, Republic of North Macedonia
Tel: 389-2-311-5844
Fax: 389-2-323-9688